Saudi GDP growth speeds up in Q3, non-oil sector still slow

Riyadh earlier released a state budget for 2019 that would increase spending by 7 percent from this year’s actual level. (AFP)
Updated 31 December 2018
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Saudi GDP growth speeds up in Q3, non-oil sector still slow

  • The Saudi economy has been hit hard in recent years by low oil prices and state austerity measures to curb a huge budget deficit
  • Growth in the non-oil sector slowed to 2.1 percent from 2.4 percent

DUBAI: Saudi Arabia’s economy grew in the third quarter at its fastest rate since early 2016, boosted by expansion of the oil sector while non-oil growth stayed sluggish, statistics agency data showed on Monday.
Gross domestic product grew 2.5 percent from a year earlier. That was an acceleration from the second quarter, when GDP rose 1.6 percent, and the fastest since the first quarter of 2016, when the same rate was registered.
The Saudi economy has been hit hard in recent years by low oil prices and state austerity measures to curb a huge budget deficit. In 2017, it shrank for the first time since the global financial crisis nearly a decade earlier.
Monday’s data suggested the recovery from that slump was still tentative. GDP growth picked up largely because of higher oil output. The oil sector expanded 3.7 percent from a year ago in the third quarter, after 1.3 percent in the second.
Growth in the non-oil sector, key for job creation and Saudi Arabia’s effort to diversify its economy, slowed to 2.1 percent from 2.4 percent.
Saudi officials have predicted a gradual acceleration of the non-oil economy next year. Bank lending to the private sector rose 2.3 percent from a year earlier in November, its fastest growth since 2016.
This month Riyadh released a state budget for 2019 that would increase spending by 7 percent from this year’s actual level. Investment spending and bonuses for state employees in the budget could revive the private sector.
But senior officials have refused to rule out further austerity steps next year, including a planned hike in fees for hiring foreign workers and a possible increase in domestic fuel prices. Such steps have weighed heavily on private sector firms.
Meanwhile, global producers agreed early this month to cut oil production in an attempt to prop up prices. Saudi Arabia said it would cut output in January by almost 5 percent from December, which would shrink the oil sector and dampen headline GDP growth.


US grants Iraq sanctions waiver for Iranian electricity imports

Updated 15 June 2019
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US grants Iraq sanctions waiver for Iranian electricity imports

  • Iraq has had several extensions to the waiver first granted last year after Washington reimposed sanctions on Tehran’s oil sector

The United States has allowed Iraq to import Iranian gas for its power grid for another three months by extending a waiver to sanctions — but insists that Baghdad seek alternative sources.
Iraq has had several extensions to the waiver first granted last year after Washington reimposed sanctions on Tehran’s oil sector forbidding countries from purchasing Iranian energy.
“An additional 120-day waiver was granted to allow Iraq to continue to pay for electricity imports from Iran,” the US State Department said.
An Iraqi government source said the extension was given during a phone call between Prime Minister Adel Abdul Mahdi and US Secretary of State Mike Pompeo.
The State Department said the United States continued to insist on “diversifying energy imports away from Iran,” however.
President Donald Trump’s administration has said oil-rich Iraq must become more self-reliant for its electricity, including by harnessing gas energy and reducing flaring at oil production sites.
US energy giant General Electric is in the running to win a large share of multibillion-dollar contracts to rebuild Iraq’s electricity system amid intense US lobbying efforts.
Washington reimposed sanctions on Iran’s oil industry in November, citing concerns about its nuclear program and what it said was its meddling in the Middle East.
Iraqi officials have said they might need years to wean the country of Iranian power.
Iraq relies heavily on Iranian gas to feed several power stations, importing roughly 1.5 billion standard cubic feet per day via pipelines in the south and east.
Washington wants to roll back Iranian influence in the Middle East, including in Iraq, where Tehran holds broad sway over politics and trade.
Although Iraq has one of the world’s largest natural gas reserves, it has moved slowly to develop them and has relied on Iran to supply it with gas and electricity.